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LATEST THINKING

From fixed fee to fixating on profit

From fixed fee to fixating on profit

The new financial fundamentals of "Everything-as-a-Service"

The new financial fundamentals of ‘Everything-as-a-Service’

OVERVIEW

Many products businesses are seizing upon the promises of digital technologies and new customer insights to deliver “everything” as a service. But, could moving to Everything-as-a-Service (EaaS) also mean putting everything at risk? EaaS requires more than a new business model. Without fundamental changes to financial structures, businesses will not be able to take advantage of the EaaS revolution.

KEY FINDINGS

Products businesses are inspired by the software companies that have moved to pure-play as-a-service models and are outperforming their more traditional counterparts across key financial indicators by considerable margins.

But crucially, if products companies want to emulate that success they’ll need to make substantial changes to their aftermarket models. Spare parts and fees for one-off repairs and equipment servicing have made a hefty contribution to product businesses’ profits to date. Service-based models require a new approach to the aftermarket. And that also means developing new capabilities in three key areas:

PLANNING FOR A MORE PREDICTABLE SCHEDULE OF PARTS AND SERVICING

MORE ACCURATE AND TIMELY INVOICING AND COLLECTION PROCESSES

ENHANCED SHORT AND LONG-TERM CONTRACT MANAGEMENT

WHAT NEXT?

Improve the predictability of part and service demandIn EaaS models, parts and service events are delivered together as part of a single promised customer outcome that is its own contract and has its own targets for cost, revenue and profitability.

Improve the predictability of part and service demand
In EaaS models, parts and service events are delivered together as part of a single promised customer outcome that is its own contract and has its own targets for cost, revenue and profitability.

Increase visibility into cost and collectionsManaging receivables is absolutely foundational to Everything-as-a-Service providers. In a business built on predictability of cash flow, it becomes increasingly important to reduce inaccuracies and delays in the invoicing process.

Increase visibility into cost and collections
Managing receivables is absolutely foundational to Everything-as-a-Service providers. In a business built on predictability of cash flow, it becomes increasingly important to reduce inaccuracies and delays in the invoicing process

Center the business on contractsContracts can no longer be simply pieces of paper to be signed and filed. They must be tightly integrated into the process of estimating and delivering on contract outcomes.

Center the business on contracts
Contracts can no longer be simply pieces of paper to be signed and filed. They must be tightly integrated into the process of estimating and delivering on contract outcomes.

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